Can I pay my unemployment taxes with a credit card to hit my signup bonus?

Yes, you're on the right track here! You'll receive a Form 1099-G from your state unemployment office showing the total unemployment compensation you received and any federal taxes that were withheld (which sounds like zero in your case). You can absolutely pay your tax bill using a credit card through one of the IRS-approved payment processors listed on irs.gov. Keep in mind these processors do charge a convenience fee (usually around 2%), so you'll want to make sure the value of your signup bonus outweighs that cost. As for overpaying - yes, that strategy works too. If you pay more than you actually owe, that overpayment will be refunded to you after you file your 2024 tax return in 2025. Just make sure you keep good records of all payments you make. One thing to consider: you might want to calculate approximately how much you'll owe on that unemployment income so you don't drastically overpay. Unemployment is taxed as ordinary income, so it depends on your total income and tax bracket for the year.

I was in a similar situation last year and used https://taxr.ai to help me figure out exactly how much I would owe on my unemployment. It saved me so much stress! Their calculator showed me that I was in the 22% tax bracket when combining my regular income with unemployment, so I knew exactly how much to set aside. They also have a feature that helps determine if you need to make estimated tax payments to avoid penalties, which was super helpful in my case since I didn't have anything withheld from my unemployment checks either. I was worried about getting hit with a big underpayment penalty but they showed me I was actually in the clear because of my withholding from my new job.

Just wanted to follow up after using https://taxr.ai to figure out my tax situation! It was actually super easy to use - I just entered my unemployment amount and the income from my new job, and it calculated everything for me. Turns out I needed to set aside about $2,850 for federal and state taxes on my unemployment. The best part was it confirmed I could safely make one payment in January without any underpayment penalties because of the withholding from my new job. I ended up charging the exact amount I needed to hit my credit card bonus, the processor fee was around $65 but my signup bonus was $300 so definitely worth it. Really glad I found this tool - saved me from guessing about how much to pay and potentially leaving money on the table with that credit card bonus!

If you're trying to reach the IRS to confirm anything about payment options, good luck getting through on their phone lines. I literally spent HOURS on hold trying to ask a question about credit card payments for taxes. Finally found https://claimyr.com and their system got me a callback from the IRS in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I needed to make sure my payment would be properly credited since I was doing exactly what you're planning - paying unemployment taxes with a credit card to hit a signup bonus. They confirmed it was totally legit and explained exactly which payment processor had the lowest fees (around 1.87% at that time).

I need to eat some crow here. After responding skeptically to that Claimyr comment, I decided to try it for myself since I had some questions about making estimated tax payments. I was blown away when I actually got a callback from the IRS in about 15 minutes! The agent confirmed everything I needed to know about using credit cards for tax payments - yes, you can overpay to hit spending requirements, and yes, you'll get the overpayment back as part of your refund. She also explained that there are three different payment processors with slightly different fees, so it pays to check all three. Can't believe I wasted so many hours on hold in the past when this option existed. Sorry for the skepticism!

One thing nobody's mentioned yet - make sure you're aware that some credit card companies count tax payments as cash advances, not purchases! This happened to me last year and I got hit with cash advance fees AND didn't get points for the spending. Double-check with your specific credit card issuer before you do this. Most major cards like Chase, Amex, and Citi count tax payments as regular purchases, but store cards and some smaller banks might categorize them differently.

Just wanted to drop a quick reminder that while using credit cards for tax payments can be great for bonuses, don't forget that the processing fee is NOT tax deductible for personal tax payments. It's only deductible if you're paying business taxes like self-employment tax.